COVID-19 and Employment contracts in United States of America

How to deal with a reduction of business during the COVID-19 pandemic?

In the United States, a company’s ability to reduce hours and/or compensation for their workforce will depend upon whether the workplace is union or non-union. In unionized environments, the respective collective bargaining agreement will determine the conditions in which compensation and hours can be reduced. In non-unionized workplaces, employers are given great latitude to reduce hours and compensation provided they comply with the Fair Labor Standards Act (“FLSA”) and/or state and local wage and hour laws regarding notice (provided a specific employment agreement does not provide otherwise).

The CARES Act created a federal initiative called the Paycheck Protection Program which provides forgivable loans to small businesses for payroll. The purpose of the program is to allow small businesses affected by COVID-19 to keep workers employed at or near their normal compensation for a period of eight (8) weeks.

If businesses are forced to lay off their workers or reduced hours, those employees are eligible for enhanced federal unemployment benefits through the CARES Act. Those enhanced unemployment benefits last through the end of July 2020. Finally, the FFCRA provides employers with tax credits to reimburse them for providing sick leave to workers who cannot get to work because of certain COVID-19 reasons.

What if I had just hired someone? Can I take my employment offer back?

Generally, if a business has offered employment but that offer has not been accepted by the applicant, then the offer can be rescinded at any time before the offer is accepted.

If the offer has been accepted, then the employer would need to follow usual termination procedures that would apply to any other employee. However, business downturn due to COVID-19 generally qualifies as a valid reason for termination absent a specific provision in an employment contract or collective bargaining agreement.

Can I impose my employees to take their remaining vacation days

Yes, businesses can generally require that employees use accrued benefits like vacation time or sick leave unless contractual provisions lay out the specific circumstances in which the business can require it. For example, in lieu of decreasing an employee’s hours, the business could require that the employee use vacation time to supplement their pay during that time.

How to deal with employees that cannot go to work/provide work from home, because they have to take care of their children?

The FFCRA deals with precisely this issue. If an employee cannot work or telework because that employee must take care of their child, then the employee is entitled to certain paid leave benefits. Generally, the employee may take up to 12 weeks of leave, receiving 2/3 of their regular rate of pay. The FFCRA encourages businesses to be flexible with employees during this challenging time as schools and childcare facilities remain closed while businesses reopen.

Not all businesses are subject to the FFCRA, and businesses can require supporting documentation to demonstrate that the employee cannot work due to a childcare situation. In addition, the FFCRA only applies if the employer otherwise has work for the employee to do. In other words, if the business has to shut down or lay off workers, the FFCRA does not help the employee. The employee would then have to rely on the unemployment benefits.

What should I do if there is still some business to do? How can I anticipate the end of the lockdown?

The U.S. Center for Disease Control (“CDC”) and Occupational Health and Safety Administration (“OSHA”) have issued guidance for businesses to operate during COVID-19. This CDC guidance can be found at this link –

Businesses are generally required to provide a safe working environment for all employees. This means following the CDC guidelines on cleaning/disinfecting, personal protective equipment, and dealing with confirmed cases of COVID-19. Businesses must create a written policy/procedure for the implementation of safety protocols at the workplace.

Employers should anticipate in increase in requests for leave because employees do not feel safe coming to work. Employers should carefully consider requests for leave and determine which laws are applicable to the employees’ specific leave requests. Generally, businesses can require that employees return to work except in limited circumstances where the employee is put at risk or in danger.

Do I have the right to terminate contracts in this period?

Yes, in general, terminations of employment are permissible. However, businesses are encouraged to carefully consider the reasons for dismissal and document the reasons. There may be an increase in employment litigation as a result of COVID-19 and employers should make sure the termination is legally permissible prior to proceeding. Anti-discrimination laws and other prohibitions on terminations in certain instances continue to apply during this time. Terminating someone’s contract because they have or are suspected to have COVID-19 could be considered illegal or retaliatory.